The Bank of England’s Monetary Policy Committee (MPC) have decided to freeze interest rates at the current level of 0.5% for another month.
The MPC introduced the record low interest rate back in March 2009 to help stimulate the UK economy into recovery.
Despite the decision to hold the interest rate at its current level for a 14th month in succession, this has come as little surprise to city analysts or indeed to many business owners throughout the UK.
The Head of Economic Analysis with the Confederation of British Industry (CBI), Lai Wah Co, commented:
“Growth in the economy looks to have held up over the first quarter, albeit at a slow rate, but there are still uncertainties about the strength and sustainability of the recovery this year.”
With growing concerns over high levels of inflation experienced in Febrauary and into March it appears that the Bank of England are playing a “wait and see” game before making any further decisions.
The Quantitative Easing (QE) programme was switched off earlier this year as the Bank had grown increasingly concerned about the level of inflation, which rose partially as a result of the amount of money pumped-in via QE, along with the impact that growing fuel prices and the increase in VAT had on the economy.
Any Changes to the Bank of England’s monetary policy are unlikely to happen until 10th May – after the General Election.
Conjecture amongst city analysts and the Bank of England is that levels of inflation should return to normal over the following few months.